Re: Yen still overvalued

["Charles Jannuzi" <jannuzi@xxxxxxxxxxxxxxxxxxxxxxxxx>]

> FWIW, I agree with Peter's assessment of Japan's situation,

I guess I don't, not completely.

> The interesting question, in light >of Peter's assessment, is why >the
Japanese  government can't >use traditional Keynesian fiscal >tools to pull
itself out of the >recession.

I'm sorry but it's getting a little frustrating recapitulating the history
of the Japanese recession for the past ten years everytime I post.

To some extent , it had. From 1994-1996 the yen went back to a cheaper level
and the economy started to pick up. At this time there were also huge
supplementary budgets in place.

The western take on these that these were all wasteful, but there are two
problems with this analysis. First, a lot of the construction projects were
already drawn up in demand from US trade negotiators back in the late 1980s,
so these naturally enough got funding. Second, in spending the budgets, by
law a lot of money was mandated to go to public works construction.

It's hard to say what is and what is not a waste. In Fukui we got a world
class music hall (actually we have 8 of them in the prefecture). I'd say
these are better than an artillery piece built by a company owned by Carlyle
Group.

Actually, some of the pork went toward defense contracting, since this is
one way Japan can balance trade from the US (US military equipment,
aerospace, software and processor chips all have huge markets in Japan).

Recently more of the money has gone toward putting internet connected pcs in
every classroom. This is something Koizumi's predecessor, Obuchi, who passed
away quite suddenly, managed to accomplish--taking money automatically
earmarked for construction and giving it to other areas.

Charles Jannuzi